Xerox’ Third-Quarter Results Get Boost from ACS Acquisition

NORWALK, CT—Oct. 21, 2010—Xerox Corp. announced today third-quarter 2010 results that include revenue of $5.4 billion, up 48 percent, and net income of $250 million, compared to $123 million in the third-quarter of 2009.

“Building on our solid first-half results, we delivered steady revenue and earnings growth in the third quarter, keeping us on track to close the year strong,” said Ursula Burns, Xerox chairman and CEO. “We’ve transformed our company into the world’s leading enterprise for business process and document management. In doing so, we’ve been successful in leveraging our brand, global scale and innovation to win multi-year contracts for business process, IT and document outsourcing. As a result, we are raising our guidance for both this year and 2011 to reflect the positive momentum we’re building in the marketplace and the efficiencies we’re driving across the business.

“During the third quarter alone, signings for service contracts grew 26 percent and pro-forma revenue from our BPO offerings was up 8 percent. Along with 13 percent growth in equipment sales, this progress fuels our healthy annuity stream for the long term,” she added.

Third-quarter revenue of $5.4 billion was up 48 percent. including a 2 point negative impact from currency. On a pro-forma basis, with ACS in the company’s 2009 results, total revenue grew 2 percent or 4 percent in constant currency.

Revenue from technology, representing the sale of document systems, supplies, technical service and financing of products, was up 3 percent or 5 percent in constant currency. Total install activity for Xerox equipment was up 20 percent, reflecting strong demand across all product segments.

Revenue from services was up 2 percent on a pro-forma basis including a 1 point negative impact from currency, and represents the company’s business process, IT and document outsourcing offerings.

Third-quarter gross margin was 33.6 percent, and selling, administrative and general expenses were 20.9 percent of revenue. On a pro-forma basis, operating margin of 9.2 percent was up nearly one point.

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